Food Costs Likely To Rise as Farmers’ Expenses Shoot Up

Famine is one of the four horsemen of the apocalypse for good reason; hunger was an unwelcome companion for most of human history. The threat it poses declined in recent decades because of innovations in agriculture and increasing prosperity. But the largely policy-inflicted economic disruptions of the past two years partially reversed progress made towards feeding the world and alleviating poverty. Now, with food prices on the rise, there’s a danger that hunger will follow.

“I want to say this loud and clear right now, that we risk a very low crop in the next harvest,” Svein Tore Holsether, the CEO and president of fertilizer giant Yara International, warned in November. “I’m afraid we’re going to have a food crisis.”

Holsether worried about the rising cost of energy and especially of natural gas, which is needed to make ammonia from which urea, a key fertilizer component, is synthesized.

“Prices for the humble chemical — yes, the stuff in urine — are soaring to levels not seen in over a decade,” The New York Times agreed a month later. “People and industries of all kinds are feeling the shocks.”

A combination of always-unpredictable nature, bad policy, and busted supply chains (also largely from policy decisions) dramatically hiked prices for natural gas and its products. Prices for alternatives to urea are also rising because of demand and parallel political decisions. The U.S. Treasury agreed in December to suspend sanctions on potash from Belarus from which about 20 percent of the world’s supply of the stuff is sourced, but other high trade barriers remain in place for fertilizer and its components. The result is that major inputs for producing the food that we eat are becoming increasingly dear when they can be found at all.- READ MORE